What is the Defend Trade Secrets Act?
The Defend Trade Secrets Act (DTSA) was passed in the House and Senate in April 2016, and is meant to promote consistency in instances of trade secret disclosure or misappropriation. Historically, the protection of trade secrets was solely governed by state law and, because each state has distinct trade secret laws, it has always been challenging to protect trade secrets across the United States in a uniform way.
The passage of the act enables companies to more easily elevate cases to the federal level, allowing them to ask Federal Courts to enforce their rights throughout the union. Under the Act, these rights offer protection against the leaking of trade secrets by allowing materials containing trade secrets to be seized in “extraordinary circumstances.” This extraordinary right gives companies added protection not previously available in every state.
The time period in which a company has to file an action has also been unified and, in some instances, extended. Under the Act, the statute of limitations is three years. This gives companies time to fully evaluate their options, conduct a thorough investigation and attempt to take remedial action before they have to take legal action. Because the limitation period starts when a trade secret violation is discovered, companies may have a longer period to enforce their rights.
Further details of the Defend of Trade Secrets Act
In addition to the recovery of damages, the Act also authorizes injunctive relief. Federal courts can issue injunctions against threatened or actual sharing of trade secrets. This can be a useful tool which can help companies mitigate their damages, and detract future misuse of their trade secrets. The amount of damages recoverable under the Act are also enhanced and broadened to include royalties and, in the case of malicious trade secret appropriation, up to double the actual damages and attorneys fees.
The DTSA does not preempt state laws, so companies can file a claim under this federal Act, state laws, or both. This expands a company’s ability to reach violators and broadens its options to protect its intellectual property.
The DTSA’s reach extends beyond the owner of the trade secret and the one who misappropriates the trade secret. In order to further discourage the misappropriation, it encourages neutral parties to be watchdogs for companies by allowing them to act as whistleblowers and provides them with immunity for disclosing trade secret violations to state or federal agents, and attorneys who may be able to prosecute the claims.
What does this mean for your business?
In light of the DTSA, it would be wise to find a UK lawyer to review existing employee contracts, handbooks, and general policies and to revise the trade secrets, non-disclosure, and non-compete sections of those documents to a) fall into compliance with the Act and to b) ensure that everyone is aware of the consequences of misappropriating their employer’s trade secrets.
Since the passage of the DTSA was recent, it is wise to consult legal counsel to see if pursuing a trade secrets case would prove more beneficial in a state or federal court. If you have questions about this or trade secrets in general, contact Attorney Tee Persad at 407-647-7887.